Uptrend may weaken: Weekly Market Report

Moneylife Digital Team 06 October 2012

A close below 5,735 on the Nifty may result in a reversal

Continuing economic reforms from the government in the week enabled the Indian market close the truncated week with a gain of almost 1%, making it the fifth positive weekly close. Investors will now focus their attention to the second quarter corporate earnings season and key economic indicators like industrial output and inflation data.

The Sensex closed the week at 18,938, a gain of 176 points (0.94%) and the Nifty rose 44 points (0.77%) to settle at 5,747. The market is likely to continue its uptrend, but a close below 5,735 on the Nifty may result in a reversal.

The market closed with modest gains on Monday as it gained momentum in the second half of the day after a sluggish opening. Resuming after a day’s break on Wednesday, the indices managed a green close amid a range-bound session.

The government determination to pursue economic reforms to put the economy back on the growth track and support from the Asian markets led the market higher on Thursday. The market snapped its four-day winning steak and closed lower on Friday on pressure from technology, healthcare and banking stocks. A brief halt in trading on the NSE after erroneous orders executed by a trader also weighed on the sentiments.

Among the sectoral indices, BSE Realty (up 6%) and BSE Capital Goods (up 3%) were the top gainers while BSE Healthcare (down 1%) was the lone loser in the week.

The top Sensex gainers were BHEL (up 7%), Tata Motors , State Bank of India (up 5% each), Hindalco Industries and Hindustan Unilever (up 4% each). The key losers on the index were Bajaj Auto, Cipla, Hero MotoCorp (down 4% each), HDFC and Tata Power (down 3% each).

The Nifty was led by Jaiprakash Associates (up 8%), Ambuja Cement, BHEL (up 7% each), Siemens and Tata Motors (up 5%). Lupin (down 5%), Bajaj Auto, Cipla, Hero MotoCorp (down 4% each) and HDFC (down 3%) settled at the bottom of the index.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—stood at 52.8 in September, same as in August. The September reading points to a significant improvement in health of the manufacturing space as the sector witnessed the weakest growth rate in nine months in August.

The ongoing slowdown in the western economies pulled down India exports for the fourth month in a row in August to 9.74% to $22 billion. Imports too dipped by 5.08% to $37.95 billion, from $40 billion in August 2011, resulting in a trade deficit of $15.7 billion for the month. The development is expected to make the task of achieving $360 billion target in the current fiscal difficult.

Unfazed by the uproar over decision on foreign direct investment (FDI) in retail, the Union Cabinet on Thursday cleared FDI in pension sector while hiking the FDI limit in insurance to 49%.

In global news, the US unemployment rate unexpectedly fell to 7.8% in September, falling below 8% for the first time in nearly four years, as employers added 114,000 jobs in the month, according to the Labor Department.

German Chancellor Angela Merkel is expected to visit to Greece next week for the first time, in a show of support for Athens after the debt-ridden nation said it will run out of money at the end of November without fresh international aid.

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